The CARES Act: Relief for Nonprofits

The Coronavirus Aid, Relief, and Economic Security (CARES) Act, a $2 trillion economic recovery package, is designed to help every aspect of the US economy, including nonprofit organizations. Most nonprofits affected by the coronavirus (COVID-19) outbreak are eligible for some relief under the CARES Act, but it depends on your group’s size, financial condition and other factors.

Paycheck Protection Program

The Paycheck Protection Program is a $349 billion loan program, administered by the Small Business Administration, which helps employers, including nonprofits, keep employees on their payrolls. To potentially qualify, you must be a 501(c)(3) or 501(c)(19) organization with less than 500 full- or part-time employees. Most organizations will receive a loan up to an amount equal to 2.5 times their average monthly payroll costs, with a maximum of $10 million.

cares act nonprofitsProceeds from the Paycheck Protection Program may only be used for paying certain expenses, including:

  • Payroll
  • Health care benefits
  • Mortgage interest
  • Rent
  • Utilities
  • Interest on debt incurred before February 15, 2020

Please note, the loans can’t be used to pay your mortgage principal or to prepay mortgage interest.

Perhaps the most reassuring aspect of the loans is that they can be forgiven as long as you follow the rules. To have the full loan amount forgiven (except for loan interest), you must retain employees and not reduce their regular salary or wages more than 25%. If you’ve already laid off staffers, rehiring them by June 30 may enable you to qualify for full loan forgiveness.

Industry Stabilization Fund

Nonprofits with over 500 employees, such as hospitals and educational institutions, may be eligible for Industry Stabilization Fund low-interest loans. When applying for one, you’ll be required to certify (among other things) that loan proceeds will be used to retain or rehire at least 90% of the nonprofit’s workforce at full pay and benefits through at least September 30.

Industry Stabilization Fund loans will not be forgiven, but there is no principal or interest due on the loans for at least the first six months after the loan is made. There is also a 2% interest-rate cap on these loans.

Resources from the National Council of Nonprofits

The National Council of Nonprofits offers more information for nonprofits to help navigate the CARES Act and Families First Coronavirus Response Act.

View details on loans available for nonprofits in the CARES Act here.

Download the report of the CARES Act provisions for nonprofits here.

Download the report of the Families First Coronavirus Response Act provisions for nonprofits here.

 

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